Lattes, iPods, and Masterworks: New Ways to Look at Money

My brother is selling his house. To get it ready for market, his family has been packing stuff in boxes. When it came time to pack his wife’s shoes, the kids were amazed. She had sixty pairs of shoes. “How much did these cost?” my brother wondered. “Only about $75 each,” his wife told him.

Their kids are still a little young to understand money, so my brother tried to translate this for his oldest son. The kid had just spent a couple weeks working, for which his grandfather paid him $20 per day. He saved his money and at the end of the two weeks, he bought an iPod. (Though what a seven-year-old kids wants with an iPod, I’ll never know…)

“One way to look at it,” my brother told him, “is that for every two pairs of shoes, you could have an iPod.”

My nephew thought about this for a bit. “That’s a lot of iPods,” he said.

“Yes,” his father said. “That’s thirty iPods.”

My nephew thought about this some more, and then, like a good Roth, came up with an entrepreneurial endeavor. “Maybe we could sell these shoes and buy more iPods,” he suggested.

It’s an amusing anecdote, but it points out something very useful, as well. One way to measure how much things are worth, is to compare them to something that you already own and value. My nephew likes his iPod, so it makes sense to show him how the cost of the shoes compare to it.

My wife often measures things in lattés. If she sees something that strikes her fancy in a store, she’ll stop and consider: “That shirt is three lattes” or “Those earrings are ten lattés” or “That book is two lattés”. Looking at things in this way, she’s able to figure out how much they’re actually worth to her.

A friend of ours measures things in Saturns. She loves her car (a Saturn, naturally), and so whenever somebody mentions something expensive, she’s able to compute it’s value to her. A fancy plasma TV might be one-fifth of a Saturn, for example. A house might be ten or twenty Saturns.

I’ve even begun doing this a little myself lately. As you know, I’m a comic book collector. Specifically, I collect the hardbound compilation volumes that the big companies release once every month. These cost $50 each. (Well, I get them for $35 each, but in my head I still think of it as $50.) So I’m able to measure things in Masterworks (the name one company uses for its series of books.) A new laptop computer is very expensive. The one I want is thirty Masterworks. The new Nintendo Wii I’ve saved for will probably cost five Masterworks. A nice dinner out is one Masterwork.

Money is an abstract concept. It doesn’t really represent anything besides time and labor, and those are hard to visualize. If you can find something concrete to use as a measure of value instead, it makes it much easier to visualize how much something is worth to you. I used to spend $250/month on books. I don’t anymore. I now know that $250 is five Masterworks, and there’s no way it’s worth it to me to spend five Masterworks each month on books.

6 Responses to “Lattes, iPods, and Masterworks: New Ways to Look at Money”

1

dokabensays:

29 July 2006 at 2:28 pm

Back in high school we measured things in CDs, where one CD equaled $12-$15. Never imagined CDs would start to become passe…

I had a similar money epiphany the other day while shopping for three different products: a KitchenAid stand mixer, a chest freezer, and a Nintendo DS lite. Each can be had for roughly $150, yet each provides a completely different experience. The mixer offers a lifetime of baking convenience. The freezer eventually pays for itself through bulk food and car/gas savings. The DS offers entertainment, but requires game purchases and is guaranteed to depreciate in a matter of weeks.

Not to belittle the DS…each has it’s place. Of course no one calls their friends to brag about their new freezer.

[...] My little brother has no respect for Blogathon. I mentioned him earlier because he was taught his son that two pairs of shoes equals one iPod. (Remember that they’re moving, and his wife is packing sixty pairs of shoes.) He just called to chat. I told him I was busy, but he offered me another story and gave me permission to print it. [...]

I’ve always thought of how many hours I had to work to get an item. So in the 90s when I was making $6/hour, an economy movie was almost 3/4 hour. If I wanted my own apartment at $450 a month I had to work 75 hours! (Working part time, this was most of a paycheck)

It certainly gave me incentive to go back to college and make more unless I wanted to live with my parents for eternity.

These days, I make a lot more but I still think things like “Is it worth 20 hours of work for this fancy tv?”

When I was at college I used to measure things in terms of loads of washing ($2 a load), Red Bull ($10 for a four pack!) or bottles of vodka ($30 a bottle). Ahhh, the life of a student.

Now that I have moved out, I tend to measure things in terms of “weeks of rent”, or sometimes hourly wage. Little bit more practical, but not quite as exciting as “I didn’t buy that skirt, now I can buy a bottle of vodka!”

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